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Govt redirects $197M underspend to vocational reform

By Pattrick Smellie

May 14 (BusinessDesk) - Fewer students than expected have taken up the government's offer of free fees for tertiary education, allowing nearly $200 million over four years to be redirected into a revamp of vocational skills training, Finance Minister Grant Robertson said in his first major speech ahead of the May 30 Budget.

Dubbed the 'well-being' Budget because of its new focus on policies that should improve individual and social well-being as much as economic growth, Robertson announced that at least some new initiatives would be funded from $1 billion of savings over the next four years on low-priority spending programmes that ministers had identified.

"I can announce today that one example of this was under-spending on the Fees Free programme due to enrolments not meeting initial forecasts," said Robertson. "This funding, some $197 million, is now to be redirected to the implementation of the Reform of Vocational Education, which Education Minister Chris Hipkins is working through."

The fees-free policy, an election promise, has been attacked by the government's political opponents as an unnecessarily expensive form of 'middle class welfare' that has not made any difference to levels of enrolment in higher education.

"The proposals are still being finalised but the reprioritisation of funding that I have announced today is an initial indication of our commitment to making this work," said Robertson to a Wellington Chamber of Commerce audience at Parliament.

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He cited announcements last week by Corrections Minister Kelvin Davis to reduce Maori imprisonment rates as a prime example of the collaborative, all-of-government approach that the well-being focus would produce across numerous policy areas.

"Former Chief Science Advisor, Sir Peter Gluckman noted that previous responses to addressing the incarceration rate for Maori have largely been individualised, ineffective, and guided by non-Maori world views," said Robertson.

"The new pathway will enable people to experience a Maori and whanau-centred approach for all of their time with Corrections, from pre-sentence to reintegration and transition in their community. It will initially focus on Maori men under 30 years of age, as this group has the highest reconviction and reimprisonment rates.

"This initiative acknowledges that our system does not work for Maori. The answer is not just another programme. This is a system change, a culture change inside our prisons to adopt a strengths-based approach to rehabilitation", using evidence and expert advice.

"This is a great example of the well-being approach in action: multiple agencies coming together to address a long-term challenge with an evidence-based and expert-informed approach. The payoff will be a long term one that will have massive social and economic benefits," said Robertson.

He reiterated the first priorities of the well-being approach that the Budget would tackle, but said policy-making based on well-being would remain a work in progress and did not amount to the government writing "a blank cheque".

"Fiscal sustainability is an inherent part of a well-being approach," said Robertson. "It’s about making sure we meet the challenges of today without compromising the ability of future generations to do so."

This year's Budget priorities were: "creating opportunities for productive businesses, regions, iwi and others to transition to a sustainable and low-emissions economy; supporting a thriving nation in the digital age through innovation, social and economic opportunities; reducing child poverty and improving child well-being, including addressing family violence; supporting mental well-being for all New Zealanders, with a special focus on under 24-year-olds; and lifting Maori and Pacific incomes, skills and opportunities".

Robertson noted that although global growth was slowing and the US-China trade war was creating additional uncertainty for businesses worldwide, the New Zealand economy was forecast to outperform the US, UK, Japan, Canada, the Eurozone and Australia over the next three years.

However, he had baulked when he had heard the expression 'rock-star economy' revived in recent economic commentary when one of the defining issues of the 2017 election had been the extent to which many New Zealanders had felt left out of the country's economic good news story.

"This gap between rhetoric and reality, between haves and have-nots, between the elites and the people, has been exploited by populists around the globe," said Robertson. "It is a long-term view of mine, and the parties that make up this government, that we need to close this gap in an inclusive, not exclusive way, because it is the right thing to do and because we need to do so to ensure the public keep faith and trust in government."

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